US economic growth rate revised up to 2.7%

Warehouse in San Francisco
Image caption A rapid restocking by US businesses added to the summer growth spurt

The US economy grew at an annualised rate of 2.7% in the third quarter of the year, revised data has suggested.

The figure is significantly higher than the 2% initial estimate that the Commerce Department released just before the presidential election.

Much of the growth was due to companies rebuilding their inventories, and is not expected to be sustained.

The first estimate itself had beaten analysts' expectations, and fuelled the suspicions of some Republicans.

The growth rate for the second quarter was confirmed at 1.3%.

Housing rebound

The revised data confirmed that a 9.5% jump in spending by the federal government during the quarter - compared with a 0.2% decline the previous quarter - played an important role in the pick-up in growth.

What the first estimate had failed to pick up was the scale of restocking by private-sector businesses.

This inventory build-up effect - which typically provides a temporary boost to economic activity early on in the recovery from a recession - added 0.77 percentage points to the pick-up in the overall growth rate in the third quarter, the Commerce Department said.

Other factors that boosted growth included the continued rise in consumer spending, stronger exports, and a slight rebound in homebuilding activity from historically low levels.

There were also some negative factors in the data, including further cuts in state and local government spending, and a fall in construction of commercial property.

Developments in the US housing market are being watched closely by economists, as they are likely to determine the durability of the recovery.

Image caption A rebound in the housing market could help to sustain the US economic recovery

Normally, periods of recovery in the US economy are led by residential construction, as building firms quickly get back to work on a backlog of projects as soon as the recession is over.

But this time round, the recession was in large part caused by the bursting of a housing market bubble, that left behind a glut of unsold homes, bankrupted many homebuilding firms, and saw the sharpest and most sustained collapse in homebuilding activity in recorded US history.

Further evidence that the housing market may be on the mend was provided by the National Association of Realtors on Thursday.

Its index of pending home sales - which tracks sales that have been agreed but not completed, and provides an early indicator of market activity - rose 5.2% to 104.8 in October, its highest level in five years, despite subdued activity in the north east due to the impact of storm Sandy.

Data controversy

Some Republicans had expressed incredulity at a string of unexpectedly strong economic figures released in October, in the run-up to the presidential elections.

The initial growth estimate followed jobs figures that showed the unemployment rate falling in September from 8.1% to 7.8% - its lowest rate since January 2009, and well below market expectations.

The positive jobs data came shortly after Mr Obama put in a poor performance during the first of the three presidential debates, and prompted some Republican supporters to call foul.

However, the latest growth estimate strengthens the evidence that the US economy genuinely enjoyed a rebound over the summer.

Meanwhile, weekly data on the number of people claiming unemployment benefits, also released on Thursday, added to the picture of recovery.

The number of claimants fell 23,000 to a seasonally adjusted 393,000 - the second such fall in as many weeks, suggesting that a sharp run-up in the number of claimants in parts of the US struck by storm Sandy four weeks ago may prove to be temporary.

The claimant count had been averaging about 375,000 before the storm struck, and peaked at 451,000.

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